In February 2016, most of the sectors of the S&P 500 index (SPY) rebounded from their respective lows on February 11, 2016. Since the beginning of February, we’ve seen markets maintaining their downturn until February 11. On February 12, markets recovered from their lows while crude oil prices rebounded from their multiyear lows.
Among these sectors, the materials sector (XLB) rose 7.3%, the highest in February. The industrial sector (XLI) rose 4.5% that month. The rally in the materials sector can be correlated to the weaker US dollar in mid-February.
Hedge funds increased stake in materials sector
Hedge funds are increasing their stakes in the materials sector, giving the sector a boost. CIBC World Markets increased its exposure in the materials sector by 870.9% to 1,26,663 shares in the fourth quarter of 2015. This compares to 13,046 in the third quarter of 2015, according to its recent 13F filing with the SEC (U.S. Securities and Exchange Commission).
Major materials sector stocks such as Alcoa (AA), Freeport-McMoRan (FCX), and Nucor (NUE) rose 23.8%, 60.9%, and 0.6%, respectively, in February 2016. The above graph shows the performance of various sectors of the S&P 500 in February.
In the next part of this series, we’ll take a look at the performance of the S&P 500’s industrial sector.